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Hamburg Buys its Energy Grid Back

21.04.2014

Earlier this year the city of Hamburg voted to buy back their energy grid from the Swedish energy company Vattenfall, ensuring the "power to the people". The value of the transaction was expected to be about €400 million.

The transaction was a result of a popular initiative launched in 2010 by a pressure group which included environmentalists, consumer organisations, unions and local churches.

In a referendum held last September, 50.9 percent voted in favour, while the Social Democratic mayor and the Christian Democratic Union, Germany's largest party, had campaigned for a no-vote.

Vattenfall said it had agreed unwillingly to the deal. "We regret to have to sell the electricity network business, but will continue to have a strong presence in the region and work closely as a partner to the city of Hamburg," said Tuomo Hatakka, head of Vattenfall's Continental Europe region.

More than 200 power grids and water systems have been bought by local administrations in Germany since 2007, according to VKU, the German federation of local utilities.

The citizens of Hamburg finds that the private sector cannot be trusted with public services – and that community ownership and participatory governance is the way to go.

Re-communalization, not privatization

The Hamburg-based civil society-led alliance “Our Hamburg – Our Grid” reminded citizens of a German federal law stipulating that municipal authorities invite bids from new companies, including communities, who wish to run the local grid once the contract term of 20 years ends. This alliance not only reminded citizens but actually called for action and campaigned for years for the buyback of the energy grid in the city.

The motivation for Hamburg citizens? That energy supply is a basic public service that should not serve profit motives. They concluded that Vattenfall and Eon – the current grid operators – don’t act in the best interest of the people and are delaying Germany’s shift to renewable energy.

Hamburg is not alone

Since 2007 there have been about 170 municipalities which bought back the grid from private companies. Cities that have chosen to not privatize- like Frankfurt and Munich –are now showing that it’s worth keeping energy supply in municipal hands. Both major German cities have a 100% renewable energy target.

Generally, we are seeing a re-municipalization trend across Germany as the idea that private is superior to state has not lived up to its promises.

This marks a clear reversal to the neoliberal policies of the 1990s, when large numbers of German municipalities sold their public services to large corporations as money was needed to prop up city budgets. The result was that consumer power prices increased by 68% compared to 1998, forcing Germans to pay more for their power than any other nation in the European Union except Cyprus and Denmark according to EU data.

Giving the power to the people

Referendums like this give the steering wheel for government to the people. It literally hands over power to the people. It leads us to the heart of democracy: empowering citizens by enabling them to exercise control over their own lives and act together to change the direction they are going in. Citizens in Hamburg reminded their elected politicians to act on behalf of the voters and be accountable for their decisions – essentially, that they are representatives of the public and not of private companies. Participation, then, is understood in its true sense: citizen empowerment instead of passive consultation or unilateral information.

People drive the energy transition in Germany

This understanding of community participation has been key in the German energy transition. More than 50% of total investments in renewable energy come from private individuals and farmers. 650 energy cooperatives have become drivers for renewable energy projects across the country.

It was the right policy framework that unleashed this development. With the feed-in tariff every citizen, community and region is able to profit from investments in renewable energy. The energy transition thus adds local value in terms of socio-economic development on the local level. This form of true participation leads to acceptance – and acceptance leads to investments.

The citizens of Hamburg were also driven by the motivation to spur local development. As the current energy grid operators are multinational companies, profits were leaking out of the northern Germany. Under democratic control, citizens will have greater powers to keep the socio-economic value in the region.